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In accordance with the envisaged timeline, on 18 October 2015 (“Adoption Day“) Iran’s Foreign Minister Mohammad Javad Zarif and the EU Foreign Policy Chief Federica Mogherini issued a joint statement announcing the official adoption of the “Joint Comprehensive Plan of Action” (“JCPOA“) between Iran and the EU/E3+3 (China, the EU, France, Germany, Russia, the UK and the USA).

On Adoption Day the JCPOA participants began to make the necessary arrangements for the implementation of their respective commitments and the EU adopted the legislative framework needed to lift its nuclear-related economic and financial sanctions against Iran. Accordingly, Council Regulation (EU) 2015/1861, Council Implementing Regulation (EU) 2015/1862 and Council Decision (CFSP) 2015-1863 were entered into, although their measures will not come into force until the International Atomic Energy Agency (“IAEA“) confirms that Iran has met its nuclear-related commitments as described in the JCPOA (“Implementation Day“). This is envisaged to be in the first half of 2016.

Following Implementation Day, a number of the existing sanctions measures will be lifted, including the restrictions relating to the supply of dual-use items and items for the oil and gas sector to Iran, however controls will remain at the EU level for certain items which could be diverted to nuclear proliferation uses. Accordingly, Regulation 2015/1861 provides that:

  • a prior authorisation shall be required for certain items listed in the Nuclear Suppliers Group list (as also included in the EU Dual Use List) (Article 2(a), Annex I);
  • a prior authorisation shall be required for certain other goods and technology, including software, derived from items on the EU Dual Use List (Article 3(a), Annex II); and
  • the supply of certain goods and technology contained in the Missile Technology Control Regime List (as included in the UK Military List and the EU Dual Use List) shall be prohibited (Article 4(a), Annex III).

Regulation 2015/1861 states that certain other controls will also remain in place following Implementation Day, notably for the supply of certain software, graphite or semi-finished metals, where they could be used in connection with nuclear proliferation-related activities, Iran’s military programme or for the benefit of the Iranian Revolutionary Guard Corps (Articles 10(d) and 15(a)).

As envisaged, Regulation 2015/1861 also provides for the removal of restrictions on certain persons, entities and bodies who are currently subject to asset freezes and travel bans. Certain other persons, entities and bodies will remain subject to sanctions.

Additionally, Regulation 2015/1861 provides that fund transfer controls currently in place in respect of payments to or from Iranian persons will be repealed on Implementation Day.

The EU legislation provides that the commitment to lift sanctions is without prejudice to the reintroduction of restrictive measures in the event of significant non-performance by Iran of its commitments under the JCPOA. Any reintroduction of sanctions in response to Iran breaking the provisions of the JCPOA would seemingly follow the usual procedures (there being no specific “snap back” provisions).

Finally, Regulation 2015/1861 provides that, in the event that sanctions are reintroduced, adequate protection will be provided for the execution of contracts concluded whilst the sanctions were lifted.

Further details will follow in a post later this week.

Author

Author

Ross Denton is a partner in Baker McKenzie’s European Community, Competition & Trade Department in London and member of the Baker McKenzie Japanese Practice Group. He also served as coordinator of the Firm’s International Trade & WTO Practice Group. Ross routinely advises US and Japanese multinationals on EU and UK competition matters and international trade law issues. In addition to his practice, Ross contributes to a number of publications, including Laws of the European Communities and Encyclopedia of Information Technology. He is a member of the UK Customs Practitioners Group and the World Trade Lawyers Association.

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